Abby purchased 100 shares of her dads favoritestock for

When faced with different alternatives, there are many criteria that can be used to identify the best one. What is the tangible criterion that is usually used in an engineering economic analysis?

Identify at least three noneconomic attributes that may be used as evaluation criteria in the decisionmaking process.

Define the term measure of worth. Identify three different commonly-applied measures.

List three evaluation criteria besides the economic ones for selecting the best automobile to purchase.

Identify the following factors as either tangible or intangible: sustainability, installation cost, transportation cost, simplicity, taxes, resale value, morale, rate of return, dependability, inflation, acceptance by others, and ethics.

Identify at least five areas of personal finances in which engineering economic analysis can be used by you in the future.

After starting the wall and roof construction on a custom-designed home, FD, the prime contractor, realized he was not going to make the big profit that he had anticipated due to the many unique features of the home for which he had not correctly estimated the cost to the owners. The contract was fixed-price with no more than 10% override on the total cost. As time proceeded, FD took the choices of the owners on appliances, finishing work on the floors and walls, and many other features and purchased look-alike substitutes from questionable-quality, internationallybased manufacturers and vendors. After living in the house for only 3 years, the owners were so disappointed with the quality of work that they decided to bring a law suit against FD and his company for breach of contract. However, they needed sound reasons upon which to base their legal claims against FD, were the case to go to court. One of the owners, being an engineer, decided to consult the Code of Ethics for Engineers to gain insight into what may be substantial violations performed during the construction phase. (a) Help the owners by suggesting Code violations and provide a brief logic as to why each one sited from the Code may be a sound basis for legal action. (b) Discuss the applicability to this situation of the Engineers Code of Ethics. (c) Suggest other resources that may be of use to the owners as they ponder legal action

8 Stefanie is a design engineer with an international railroad locomotive manufacturing company in the state of Illinois. Management wants to return some of the engineering design work to the United States rather than export all of it to India, where their primary design work have been accomplished for the last decade. This transfer will employ more people locally and could improve the economic conditions for families in and around Illinois. Stefanie and her design team were selected as a test case to determine the quality and speed of the design work they could demonstrate on a more fuelefficient diesel locomotive. None of her team members or she has done such a significant design job themselves, because their jobs had previously entailed only the interface with the subcontracted engineers in India. One of her team members had a great design idea on a key element that will improve fuel efficiency by approximately 15%. She told Stefanie it came from one of the Indian-generated documents, but that it would probably be okay for the team to use it and remain silent as to its origin, since it was quite clear the U.S. management was about to cancel the foreign contract. Though reluctant at first, Stefanie did go forward with a design that included the efficiency improvement, and no mention of the origin of the idea was made at the time of the oral presentation or documentation delivery. As a result, the Indian contract was cancelled and full design responsibility was transferred to Stefanies group. Consult the NSPE Code of Ethics for Engineers (Appendix C) and identify sections that are points of concern about Stefanies decisions and actions.

Consider the common moral that stealing is wrong. Hector is with a group of friends in a local supermarket. One of Hectors buddies takes a highenergy drink from a 6-pack on the shelf, opens it, drinks it, and returns the empty can to the package, with no intention of paying for it. He then invites the others to do the same saying Its only one drink. Others do it all the time. All the others, except Hector, have now consumed a drink of their choice. Personally, Hector believes this is a form of stealing. State three actions that Hector can take and evaluate them from the personal moral perspective.

Claude is a fourth-year engineering university student who has just been informed by his instructor that he made a very low grade on his Spanish language final test for the year. Though he had a passing score prior to the final, his final grade was so low that he has now flunked the entire year and will likely have to extend his graduation another semester or two. Throughout the year, Claude, who hated the course and his instructor, has copied homework, cheated on tests, and never seriously studied for anything in the course. He did realize during the semester that he was doing something that even he considered wrong morally and ethically. He knew he had done badly on the final. The classroom was reconfigured for the final exam in a way that he could not get any answers from classmates, and, cell phones were collected prior to the exam, thus removing texting and using WhatsApp possibilities to friends outside the classroom who may help him on the final exam. Claude is now face-to-face with the instructor in her office. The question to Claude is What have you been doing throughout this year to make passing scores repeatedly, but demonstrate such a poor command of Spanish on the final exam? From an ethical viewpoint, what options does Claude have in his answer to this question? Also, discuss some of the possible effects that this experience may have upon Claudes future actions and moral dilemmas.

Abby purchased 100 shares of her dads favorite stock for $25.80 per share exactly 1 year ago, commission free. She sold it today for a total amount of $2865. She plans to invest the entire amount in a different corporations stock today, but must now pay a $50 commission fee. If she plans to sell this new stock exactly 1 year from now and realize the same return as she has just made, what must be the total amount she receives next year? Include the commission fee as a part of the purchase price, but neglect any tax effects.

In order to build a new warehouse facility, the regional distributor for Valco Multi-position Valves borrowed $1.6 million at 10% per year interest. If the company repaid the loan in a lump sum amount after 2 years, what was (a) the amount of the payment, and (b) the amount of interest?

RKI Instruments borrowed $4,800,000 from a private equity firm for expansion of its facility for manufacturing carbon monoxide monitors. The company repaid the loan after 1 year with a single payment of $5,184,000. What was the interest rate on the loan?

Callahan Construction borrowed $2.6 million to finance the construction of an entertainment complex in a smart community development project. The company made interest only payments of $312,000 each year for 3 years and then repaid the principal in a single lump sum payment of $2.6 million. What was the interest rate on the loan?

Which of the following 1-year investments has the highest rate of return: $12,500 that yields $1125 in interest, $56,000 that yields $6160 in interest, or $95,000 that yields $7600 in interest?

A new engineering graduate who started a consulting business borrowed money for 1 year to furnish the office. The amount of the loan was $45,800, and it had an interest rate of 10% per year. However, because the new graduate had not built up a credit history, the bank made him buy loan-default insurance that costs $900. In addition, the bank charged a loan set-up fee of 1% of the loan principal. What was the effective interest rate the engineer paid for the loan?

7 Determine the amount of money FrostBank might loan a housing developer who will repay the loan 2 years from now by selling eight water-view lots at $240,000 each. Assume the banks interest rate is 10% per year.

Bodine Electric, based in Des Moines, Iowa, USA, makes gear motors with a three-stage, selectivelyhardened gearing cluster that is permanently lubricated. If the company borrows $20 million for a new distribution facility in Europe, how much must it pay back each year to repay the loan in six equal annual payments at an interest rate of 10% per year?

DubaiWorks manufactures angular contact ball bearings for pumps that operate in harsh environments. The company invested $2.4 million in a process that resulted in net profits of $760,000 per year for five consecutive years. What rate of return did the company make?

A capital investment firm placed $1.5 million 2 years ago to acquire part-ownership in an innovative chip making company. How long will it take from the date of their initial investment for their share of the chip company to be worth $3 million, if the company is realizing a 20% per year return?

Southwestern Moving and Storage wants to have enough money to purchase a new tractor-trailer in 3 years. If the unit will cost $250,000, how much should the company set aside each year provided the account earns 9% per year?

Identify the following as cash inflows or outflows to a privately-owned water company: well drilling, maintenance, water sales, accounting, government grants, issuance of bonds, energy cost, pension plan contributions, heavy equipment purchases, used equipment sales, stormwater fees, and discharge permit revenues.

The annual cash flows (in $1000 units) for Browning Brothers Glass Works are summarized. (a) Determine the total net cash flow over the 5 years. (b) Calculate the percentage of revenues represented by expenses for each year.

4 Bucknell, Inc. uses the calendar year as its fiscal year. Determine the total net cash flow recorded at the end of the fiscal year.

To attract new customers, EP Employees Credit Union advertised that they will begin paying 3% interest every quarter on all savings accounts. (Their competitors pay interest every 6 months.) The credit union uses March 31st, June 30th, September 30th, and December 31st as quarterly interest periods. Determine (a) the end-of period totals in the account, and (b) the interest paid each quarter on the total. Assume there are no withdrawals and that quarterly interest is not redeposited.

Construct a cash flow diagram that represents the amount of money that will be accumulated in 7 years from an initial investment of $20,000 now and $3,500 per year for 7 years at an interest rate of 8% per year.

Construct a cash flow diagram to find the present worth in year 0 of a $400 expenditure in year 3, a $900 receipt in year 4, and $100 expenses in each of years 5 and 6 at an interest rate of 15% per year.

Use economic equivalence to determine the amount of money or value of i that makes the following statements correct. (a) $5000 today is equivalent to $4275 exactly 1year ago at i = ___% per year. (b) A car that costs $28,000 today will cost $____ a year from now at i = 4% per year. (c) At i = 4% per year, a car that costs $28,000 now, would have cost $____ one year ago. (d) Last year, Jackson borrowed $20,000 to buy a preowned boat. He repaid the principal of the loan plus $2750 interest after only 1 year. This year, his brother Henri borrowed $15,000 to buy a car and expects to pay it off in only 1 year plus interest of $2295. The rate that each brother paid for his loan is ___ % for Jackson and ___ % per year for Henri. (e) Last year, Sheila turned down a job that paid $75,000 per year. This year, she accepted one that pays $81,000 per year. The salaries are equivalent at i = ____% per year.

Vebco Water and Gas received a contract for a seawater desalination plant wherein the company expected to make a 28% rate of return on its investment. (a) If Vebco invested $8 million the first year, what was the amount of its profit in that year? (b) What amount would have to be invested to realize the same monetary amount of return if the rate decreases to 15% per year?

A publicly traded construction company reported that it just paid off a loan that it received 1 year earlier. If the total amount of money the company paid was $1.6 million and the interest rate on the loan was 10% per year, how much money had the company borrowed 1 year ago?

During a recession, the price of goods and services goes down because of low demand. A company that makes Ethernet adapters is planning to expand its production facility at a cost of $1,000,000 one year from now. However, a contractor who needs work has offered to do the job for $790,000 provided the company will do the expansion now instead of 1 year from now. If the interest rate is 10% per year, how much of a discount is the company receiving?

Bull Built, a design/build engineering company that has always given year-end bonuses in the amount of $4,000 to each of its engineers, is having cash flow problems. The president said that although Bull Built couldnt give bonuses this year, next years bonus would be large enough to make up for this years omission. If the interest rate is 10% per year, what is the equivalent bonus that engineers should receive next year?

State University tuition and fees can be paid using one of two plans. Early-bird: Pay total amount due one year in advance and get a 10% discount. On-time: Pay total amount due when classes start. If the cost of tuition and fees is $20,000 per year, (a) how much is paid in the early-bird plan, and (b) at an interest rate of 6% per year, what is the equivalent amount of the savings compared to paying when classes start, that is, 1 year later than the early-bird plan?

Durco Automotive needs a $1 million balance in its contingency fund 3 years from now. The CFO (chief financial officer) wants to know how much to deposit now into Durcos high-yield investment account. Determine the amount if it grows at a rate of 20% per year (a) simple interest, and (b) compound interest.

5 TMI Systems, a company that customizes software for construction cost estimates, repaid a loan obtained 3 years ago at 7% per year simple interest. If the amount that TMI repaid was $120,000, calculate the principal of the loan.

The Nicor family is planning to purchase a new home 3 years from now. If they have $240,000 now, how much will be available 3 years from now? The fund grows at a compound rate of 12% per year.

(a) At a simple interest rate of 12% per year, determine how long it will take $5000 to increase to twice as much. (b) Compare the time it will take to double if the rate is 20% per year simple interest.

Valley Rendering, Inc. is considering purchasing a new flotation system for grease recovery. The company can finance a $150,000 system at 5% per year compound interest or 5.5% per year simple interest. If the total amount owed is due in a single payment at the end of 3 years, (a) which interest rate should he company select, and (b) how much is the difference in interest between the two schemes?

Iselt Welding has extra funds to invest for future capital expansion. If the selected investment pays simple interest, what annual interest rate would be required for the amount to grow from $60,000 to $90,000 in 5 years?

In order to make CDs look more attractive as an investment than they really are, some banks advertise that their rates are higher than their competitors rates; however, the fine print says that the rate is based on simple interest. If you were to deposit $10,000 at 10% per year simple interest in a CD, what compound interest rate would yield the same amount of money in 3 years? Solve by formula and write the spreadsheet function to display the i value.

Fill in the missing values (A through D) for a loan of $10,000 if the interest rate is compounded at 10% per year.

A company that manufactures general-purpose transducers invested $2 million 4 years ago in high-yield junk bonds. If the bonds are now worth $2.8 million, what rate of return per year did the company make on the basis of (a) simple interest, and (b) compound interest? (c) What is the spreadsheet function to find the answer for compound interest?

Identify the following as either equity or debt financing: bonds, stock sales, retained earnings, venture capital, short term loan, capital advance from friend, cash on hand, credit card, home equity loan.

What is the weighted average cost of capital for a corporation that finances an expansion project using 40% retained earnings and 60% venture capital? Assume the interest rates are 10% for equity financing and 16% for debt financing.

Managers from different departments in Bensen Systems, a large multinational corporation, have offered seven projects for consideration by the corporate office. A staff member for the chief financial officer used key words to identify the projects and then listed them in order of projected rate of return as shown below. If the company wants to grow rapidly through high leverage and uses only 5% equity financing that has a cost of equity capital of 10% and 95% debt financing with a cost of debt capital of 19%, which projects should the company undertake?

Your boss, whose background is in financial planning, is concerned about the companys highweighted average cost of capital of 21%. He has asked you to determine what combination of debtequity financing would lower the companys WACC to 13%. If the cost of the companys equity capital is 6% and the cost of debt financing is 28%, what debt-equity mix would you recommend?

Last month you lent a work colleague $5000 to cover some overdue bills. He agreed to pay you in 1 month with interest at 2% for the month, thus owing you $5100. Today, when the repayment is due, he asked you to extend the loan for another month and he would pay you the $5100 next month. In the meantime, you have had the offer to invest as much as you wish in an oil-well venture that is expected to pay 25% per year and a hot new IT stock that is estimated to return 30% the first year. If you let your colleague have another month, what is the opportunity cost of your decision? (Note: Express your answer in dollar and percentage amounts.)

Write the engineering economy symbol that corresponds to each of the following spreadsheet functions. (a) PV (b) PMT (c) NPER (d) IRR (e) FV ( f ) RATE

State the purpose for each of the following six built-in spreadsheet functions. (a) PV(i%,n,A,F) (b) FV(i%,n,A,P) (c) RATE(n,A,P,F) (d) IRR(first_cell:last_cell) (e) PMT(i%,n,P,F) ( f ) NPER(i%,A,P,F)

For the following five spreadsheet functions, (a) write the values of the engineering economy symbols P, F, A, i, and n, using a ? for the symbol that is to be determined, and (b) state whether the displayed answer will have a positive sign, a negative sign, or it cant be determined from the entries. (1) = FV(8%,10,3000,8000) (2) = PMT(12%,20,16000) (3) = PV(9%,15,1000,600) (4) = NPER(10%,290,,12000) (5) = FV(5%,5,500,2000)

Emily and Madison both invest $1000 at 10% per year for 4 years. Emily receives simple interest and Madison gets compound interest. Use a spreadsheet and cell reference formats to develop relations that show a total of $64 more interest for Madison at the end of the 4 years. Assume no withdrawals or further deposits are made during the 4 years.

All of the following are examples of noneconomic factors except: (a) Availability of resources (b) Goodwill (c) Customer acceptance (d) Profit

Another name for noneconomic attributes is: (a) Sustainability (b) Intangible factors (c) Equivalence (d) Evaluation criteria

All of the following are noneconomic attributes except: (a) Sustainability (b) Morale (c) Taxes (d) Environmental acceptability

All of the following mean the same as Minimum Attractive Rate of Return except: (a) Hurdle rate (b) Inflation rate (c) Benchmark rate (d) Cutoff rate

The time it would take for money to double at a simple interest rate of 5% per year is closest to: (a) 10 years (b) 12 years (c) 15 years (d) 20 years

At a compound interest rate of 10% per year, the amount that $10,000 one year ago is equivalent to now is closest to: (a) $8264 (b) $9091 (c) $11,000 (d) $12,100

The compound interest rate per year that amounts of $1000 one year ago and $1345.60 one year hence are equivalent to is closest to: (a) 8.5% per year (b) 10.8% per year (c) 20.2% per year (d ) None of the above

The simple interest rate per year that will accumulate the same amount of money in 2 years as a compound interest rate of 20% per year is closest to: (a) 20.5% (b) 21% (c) 22% (d) 23%

In order to finance a new project costing $30 million, a company borrowed $21 million at 16% per year interest and used retained earnings valued at 12% per year for the remainder of the financing. The companys weighted average cost of capital for the project was closest to: (a) 12.5% (b) 13.6% (c) 14.8% (d) 15.6%

A company that utilizes carbon fiber 3-D printing wants to have money available 2 years from now to add new equipment. The company currently has $650,000 in a capital account and it plans to deposit $200,000 now and another $200,000 one year from now. The total amount available in 2 years, provided it returns a compounded rate of 15% per year, is closest to: (a) $1,354,100 (b) $1,324,100 (c) $1,125,125 (d) $1,050,000